Redrawing the Map of Global Capital Flows: The Role of Cross-Border Financing and Tax Havens
Global firms finance themselves through foreign subsidiaries, often shell companies in tax havens, which obscures their true economic location in official statistics. We associate the universe of traded securities issued by firms in tax havens with their issuer's ultimate parent and restate bilateral investment positions to better reflect the financial linkages connecting countries around the world. Portfolio investment from developed countries to firms in large emerging markets is dramatically larger than previously thought. The national accounts of the United States, for example, understate the U.S. position in Chinese firms by nearly 600 billion dollars, while China's official net creditor position to the rest of the world is overstated by about 50 percent. Further, we demonstrate how offshore issuance in tax havens affects our understanding of the currency composition of external portfolio liabilities and the nature of foreign direct investment. Finally, we provide additional restatements of bilateral investment positions, including one based the geographic distribution of sales.
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Copy CitationAntonio Coppola, Matteo Maggiori, Brent Neiman, and Jesse Schreger, "Redrawing the Map of Global Capital Flows: The Role of Cross-Border Financing and Tax Havens," NBER Working Paper 26855 (2020), https://doi.org/10.3386/w26855.Download Citation
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Non-Technical Summaries
- In 2017, securities issued by corporations based in tax havens — mostly offshore financial centers — accounted for 10 percent of the...
Published Versions
Antonio Coppola & Matteo Maggiori & Brent Neiman & Jesse Schreger, 2021. "Redrawing the Map of Global Capital Flows: The Role of Cross-Border Financing and Tax Havens," The Quarterly Journal of Economics, Oxford University Press, vol. 136(3), pages 1499-1556. citation courtesy of 
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